By law, most companies around the country need to have workers' comp insurance for their employees. It helps cover medical expenses, lost wages, and other costs for work-related injuries or illnesses. But every state has its own workers' compensation laws and regulations, making it tricky for businesses to keep up with the ever-changing rules.
Like in Florida, employers can get certain workers' comp exemptions if they meet specific criteria. To help you determine whether your company qualifies for an exemption, let's look more closely at the specifics of workers' comp and how it works in the Sunshine State.
Are You Required to Have Workers' Compensation in Florida?
Yes, workers' comp is required in Florida for most businesses with employees. Here's who's required to carry workers' comp in Florida:
- Companies in the construction industry with one or more employees
- Companies in other industries with four or more employees
- Agricultural companies with six regular employees or 12 seasonal workers who work at least 30 days in a season but no more than 45 days a year
Employees that count towards these totals include non-exempt business owners and the rest of your staff. A non-exempt business owner is simply one who hasn't filed for an exemption (you'll find more on this below). Subcontractors don't count toward this number because they need to have their own coverage.
But if you're hiring a subcontractor, you're responsible for verifying proof of coverage with their insurance company by asking for a Certificate of Insurance (COI) and other documentation. If you don't double-check their paperwork and your subcontractors don't have the right workers' compensation insurance coverage, you're on the hook for on-the-job injuries.
Who is Exempt from Workers' Comp in Florida?
As you can see, some businesses don't meet the criteria listed above. Businesses that are exempt from workers' comp in Florida include:
- Construction companies with no employees (including yourself by filing for an exemption)
- Businesses in other industries with three or fewer employees
- Agricultural companies with five or fewer regular employees or 11 or fewer seasonal workers
Do you fall into one of these categories? Then Florida law says you don't have to carry workers' comp insurance. In that case, your business is automatically exempt and you don't have to file any additional paperwork.
Keep in mind that in the construction space, sole proprietors and partners automatically count as employees. In other industries, that's the case only if you choose to be. To opt-in, you'll need to file a form DWC-251 with the Florida Division of Workers' Compensation.
What If You Have Too Many Employees?
If you're one to a few employees over the limit, you may be able to bring down your employee count by filing for individual exemptions for officers of a corporation (such as the president or chief financial officer) or a member of a limited liability company (LLC). In some cases, this can reduce your employee count enough that you no longer need coverage.
Once everyone receives a Certificate of Election to be exempt, they're no longer considered an employee of the business and, therefore, aren't eligible for workers' compensation benefits if they're injured at work. The certificate is valid for two years and is renewable.
As a part of this process, business owners must sign their own exemption form. Your signature means that you fully understand and accept the risks of not carrying this type of insurance policy.
And beginning on January 1, 2023, you have to complete an online workers' compensation coverage and compliance tutorial before submitting your application.
How to Get Workers' Comp Exemptions in Florida
Since foregoing workers' comp is such a serious decision, you'll want to make sure you're covering all your bases. There are some very specific guidelines on applying for an exemption, so let's examine those in more detail based on your business type.
The construction industry is pretty hazardous, so Florida statutes place the most limits on these firms. You can see from this download available from Florida State Department whether your business falls into this category.
To qualify for an exemption, your corporation needs to:
- Be registered with the Florida Division of Corporations
- Have listed the applicant as a corporate officer with the Florida Department of State
- Ensure the applicant has at least 10% ownership
- Pay a $50 application fee that doesn't come back as insufficient funds
- Not be under an active Stop Work Order (SWO). (While under this order, you must stop all company operations until you're in compliance and have paid any fines.)
- Not be affiliated with a Working in Violation (WIV). (Happens when you continue working in violation of a Stop Work Order.)
- Ensure no more than three officers request exemptions
The rules for an LLC are similar to the ones for a corporation. The only difference is that the person who applies doesn't have to be listed as an officer of the corporation.
For businesses not in the construction industry, Florida law requires that corporations meet the following requirements to get an exemption from workers' comp:
- Be registered with the Division of Corporations
- List the applicant for the exemption as an officer with the Florida Department of State
- Not be under an active Stop Work Order (SWO)
- Not be affiliated with a Working in Violation (WIV)
Limited liability companies outside of construction must meet the same guidelines as corporations, except the person applying doesn't have to be listed as an officer.
In addition, the company must:
- Ensure the applicant has at least 10% ownership of the LLC
- At maximum, only request exemptions for ten owners (also called members) no matter how many members there are in the LLC
If you're not sure if you and your company qualify for an exemption, you can contact the state of Florida by calling (850) 413-1609. Their workers' compensation website also says you can send an email to firstname.lastname@example.org.
Why Get an Exemption?
If workers' comp offers such important protection, why would anyone want an exemption?
The answer is plain and simple—policies can be quite expensive. Depending on the size of your business, the industry you're in, and other factors, it can feel like your workers' comp premiums are a big expense. So, an exemption can help business owners lower their operating expenses.
And since no one likes paying too much for things, an exemption sometimes makes sense. But opting out of coverage also means you'll have to pay for any medical expenses and lost wages that come with a workplace injury or illness out of pocket. And a single injury could really hurt your company financially. In 2020, the average cost of a work injury that required medical treatment was $44,000.
For the vast majority of business owners, workers' comp insurance makes sense. But that doesn't mean you have to overpay for it, either. Hourly integrates your payroll with your workers' comp insurance, so your premiums are based on your actual payroll—not estimates.
Florida Workers' Comp Penalties
Like most states, Florida has penalties for companies operating without the required coverage. Audits of your coverage and potential penalties begin if a job-site inspection reveals that you're out of compliance.
The first step is typically a Stop Work Order and penalty. You'll be required to pay two times the amount you would have paid for premiums over the past two years. You may also face criminal charges from the Division of Investigative & Forensic Services for working without the proper workers' comp insurance.
Keep in mind that it's illegal to:
- Work during a Stop Work order
- Lie about your staff or business to reduce your premiums
- Not report an injured worker to your insurer
- Threaten to fire a worker who attempts to file a claim for an injury
- Make workers pay the workers' compensation premiums by deducting it from their pay
- Call an employee an independent contractor to avoid covering them
Get Coverage If You Need It
If you don't have workers' comp insurance and are supposed to, sign up now to protect your company. The goal is to avoid all the problems, fines, and headaches that come with not complying with the law.
If you're eligible for an exemption, think through the risks. You'll be responsible for paying for on-the-job injuries out of pocket. Those not covered with workers' comp will also be able to sue you if they get hurt.
While not recommended, if you're comfortable with the risks, go ahead and apply online for the exemption. If the state approves your application, you won't have to go through the process again for two years.
How long is a workers' comp exemption good for in Florida?
The Certificate of Election that you get after filing for a workers' comp exemption is good for two years and is renewable.
How many employees do I need to be required to have workman's comp in Florida?
The number of employees depends on your industry. Those in construction need just one, and in most others, you need four or more. If you're in the agricultural industry, you need six regular employees or 12 seasonal workers working a minimum of 30 days per season but no more than 45 days per year.